Finance

10 Rules to Follow When Taking a Personal Loan

Taking a personal loan is quite tricky, almost like SME Business loans Singapore. You need to be really careful to make the right choice. There are lots of things associated with personal loans. There are many different types of personal loans Singapore. You need to use some rules while taking these loans. These rules will help you to manage the EMI and loan effectively.

In some cases, personal loans are very useful, but in other cases, they might put you in trouble. Not all types of personal loans are good for you. You have to be really careful while choosing these types of loans. If you don’t choose correctly, you will end up paying way more money than it is necessary. People mostly focus on the interest rate of personal loans. But that is not all. You need to focus on various other things. There are some people who can easily manage personal loans. It is because they follow proper rules while managing personal loans.

If you want to use personal loans for your advantage, you need to follow the golden rules. By following these rules, you will be able to manage the loan easily.

Ten Rules to Follow When Taking a Personal Loan:

Personal loans are one of the easiest loans to get. If you are facing trouble getting any other loan, you can try for a personal loan. But you need to know all the things about it. Apart from that, you need to follow the rules so that you don’t end up adding a personal liability.

Know-How Much Money You Need:

The first thing you need to do is known how much money you actually need. This is the first and most basic rule of getting a personal loan. When you know the money you need, you will be able to choose from various options. You can go on the website, enter the amount of loan you need, and check the monthly EMI you need to pay along with interest rates. Every loan website has an EMI calculator, which helps you to calculate the EMI.

  • Credit Score:

After knowing about the amount you need, you need to check your credit score. You can get the score from a credit bureau. If you have a credit card, you can check it on the statement. You can also use a credit score service to know your credit score. The score should be more than 700 or 750 to qualify for most of the loans.

  • Check Interest Rates:

After checking the credit score, you need to check the interest rates. Different lenders offer different rates for personal loans. You need to contact all the lenders and get information about interest rates. Rates matter a lot. It can have a direct effect on your repayment ability. If the interest rate is less, you have to pay less money. If the interest rate is more, you have to pay more money.

  • Compare Loan Offers:

You need to check the offers that different lenders provide. Personal loans are given by banks, lenders, credit unions, etc. They provide regular offers for the loan. You need to check the loan offers and compare them to find out which bank or lender is providing the best personal loan offer. If you are lucky, you can get a low interest personal loan.

  • Calculate EMI:

You need to calculate the EMI for the loan. You can use an EMI calculator. You need to go on the website and calculate the EMI you need to pay every month. Choose an EMI which you can afford. You have to consider the amount as it will be deducted from your monthly income. The EMI amount should be less than your total monthly salary.

  • Pre-payment Charges:

You need to check the pre-payment charge of the loan. Many lenders charge extra fees for early payment of the loan. You need to make sure the lender provides flexibility in repayment. You can save a lot of money if they charge less fess when you make the repayment. Pre-payment charges vary from lender to lender. If there are no charges, you can easily pay the loan without any charges.

  • Read Terms and Conditions:

You need to read all the terms and conditions in the papers to understand everything. It is very important to read and understand the terms and conditions of the loan you are taking. There are lots of technical terms used in the documents. If you don’t understand any term, you need to ask about it. Be clear when it comes to terms and conditions. Don’t sign the loan agreement before you understand everything.

  • Pay on Time:

You need to pay the EMI of the loan on time. If you fail to do so, there will be additional charges. It will also affect your overall credit score. If you are unable to pay the loan, it will become your personal liability. So, you need to pay the loan every month before the due date.

  • Short Term Loan:

You need to choose a personal loan with less tenure. When you choose a short term loan, you have to pay less interest in money. Don’t go for long term loans unless it is really required. Paying off the loan quickly and getting done with it is best for you. You will fall into a debt trap if you keep on taking loans.

  • Don’t take multiple Loans:

Avoid taking multiple loans at once. You need to pay and clear out one loan and then take another. If you keep on taking loans, you will not be able to pay it off. The interest rate will keep on rising. You need to avoid taking two personal loans at the same time.

These are the ten important rules you need to follow when taking a personal loan. Make sure you follow all the rules clearly. Don’t rush into taking personal loans. Take the loan only when it is necessary. And when you take the loan, remember the rules.

Author Since: Oct 17, 2018

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